Northern Utah Peach Orchard Costs and Returns Comparison by Management Strategy, 20 Acres, 2015

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1 June 2017 Applied Economics/ pr Northern Utah Peach Orchard Costs and Returns Comparison by Management Strategy, 20 Acres, 2015 Trevor Knudsen, Graduate Research Assistant, Department of Applied Economics Kynda Curtis, Professor and Extension Specialist, Department of Applied Economics Jennifer Reeve, Associate Professor, Department of Plants, Soils and Climate Brent Black, Professor and Extension Specialist, Department of Plants, Soils and Climate Introduction This publication outlines the costs and returns associated with eleven separate peach orchard treatments based upon research conducted at Utah State University, Kaysville Research Farm, from This publication is intended to be a guide used to make production decisions, determine potential returns, and prepare business and marketing plans. The practices described are not the recommendations of Utah State University. The Baseline Peach Orchard Budgets used in this publication are taken from costs and return studies published by Knudsen et al. (2016a) and Knudsen et al. (2016b). The establishment and operating costs are meant to be representative of a Utah peach orchard, but should be adjusted where necessary to reflect individual situations. Site selection, peach variety, pest management, and other practices will affect the total net returns to peach orchard production. Treatments The eleven separate orchard treatments are described below. Production inputs used and management practices are given for each treatment. Each treatment is associated with an organic orchard or a conventional/integrated orchard production system. Organic Orchard Treatments: 1) Organic Tillage: compost, feathermeal, trace element spray, pesticides, sulfur, tillage, alleyway mowing, pruning, thinning, seed 2) Organic Fabric Mulch: compost, sulfur, alleyway mowing, stakes, grass seed, mulch fabric 3) Organic Legume Straw: compost, sulfur, alleyway mowing, in-row mowing, straw, legume seed 4) Organic Legume Mowing: compost, sulfur, alleyway mowing, in-row mowing, legume seed 5) Organic Grass Straw: compost, feathermeal, trace element spray, pesticides, sulfur, alleyway mowing, in-row mowing, straw, grass seed 6) Organic Grass Mowing: compost, sulfur, alleyway mowing, in-row mowing, grass seed Conventional/Integrated Orchard Treatments: 1) Conventional: fertilizer, urea, herbicide, pesticides, sulfur, alleyway mowing, grass seed 1

2 2) Conventional Transitioned to Organic: fertilizer, urea, compost, feathermeal, trace element spray, pesticides, sulfur, alleyway mowing, in row mowing, grass seed 3) Integrated Fertility: compost, feathermeal, trace element spray, herbicide, pesticides, sulfur, alleyway mowing, in row mowing, grass seed 4) Integrated Weed: fertilizer, urea, herbicide, pesticides, sulfur, paper mulch, alleyway mowing, grass seed 5) Paper Mulch Compost: compost, sulfur, paper mulch, alleyway mowing, in row mowing, grass seed Inputs A brief description of the various applications used for each treatment and the associated partial budget with an approximate cost for inputs, applications, and any additional machinery is given below. It is assumed that the labor cost is $15 per hour (Galinato et al., 2014) and that the orchard is 20 acres with a 20-year lifespan. All prices are on a per acre basis. Compost - The price of compost is estimated at $80 per ton, (Intermountain Farmers Association, Country Stores, personal communication, September 15, 2014) and the application rate is 5 tons per acre. The expense for the compost spreader (used for compost, feathermeal, and straw) is $125 per acre (Chapman, 2014). Labor for spreading compost is 3.5 hours at $15 per hour. Feathermeal - The cost of feathermeal is estimated at $38.50 for 50 lbs. (or $.077/lb.). The application rate varies depending on the treatment from 1,390 pounds per acre to 2,250 pounds per acre (Seven Springs Farm, n.d.). Trace Element Spray - Metalosate Mulitmineral foliar sprays were used for trace mineral application in both the organic and conventional treatments. The conventional multimineral spray costs $36 per gallon and is applied at a rate of 1 gallon per acre (Intermountain Farmers Association, 2014). The organic treatment costs $12.50 per pound and is applied at a rate of 1.3 pounds per acre (Earthwise Organics, 2014). Pesticide - Pesticides used for the organic orchard include Dipel DF Pro and Isomate BTP for Twig Borer, at a cost of $20 per pound and $80 per gallon respectively, each applied at 1 pound or gallon per acre (Arbico Organics, 2014; Intermountain Farmers Association, 2014). Stylet Oil is used for Green Peach Aphids, at a cost of $20 per gallon and applied at 2 gallons per acre (JMS Stylet-Oil, n.d.). The conventional orchard uses Captan 50 WP for Twig Borer, at a cost of $10.65 per pound and applied at 4 pounds per acre. A dormant oil spray is used for Green Peach Aphids, at a cost of $8.50 per gallon and is applied at 3 gallons per acre (Intermountain Farmers Association, 2014). Sulfur - To control powdery mildew, sulphur granules are applied to each orchard. For organic treatments, the sulphur granules cost $0.90 per pound and are applied at a rate of 100 lbs. per acre (Arbico Organics, 2014). The conventional treatments use sulphur granules that cost $0.40 per pound and are applied at a rate of 200 pounds per acre (Intermountain Farmers Association, 2014). Tillage - Added labor for tilling is assumed at $15 per hour and requires 5 hours per acre. The tiller expense is $47.10 per acre ($9,000 purchase price and a 10-year useful life (Painter, 2011)). Mowing - Alleyway mowing assumes 1.5 hours of labor at $15 per hour and in-row mowing assumes 5 hours of labor at the same rate. Alleyway mower (flail mower) expense is $15.70 per acre ($3,000 purchase price, $300 salvage value, and a 10-year useful life (Painter, 2011) and in-row mowing expense (Weed Badger, 2014) is $26.25 per acre ($8,800 purchase price and a 20 year useful life (Weed Badger, 2014)). Mulch Fabric - Weed fabric costs $0.20 per square foot and has a life of 20 years; fabric stakes cost $0.08 each, and assumes 500 stakes per acre to secure the fabric (Intermountain Farmers Association, 2015). Straw - Straw costs $250 per ton (Intermountain Farmers Association, 2014) and is applied at 1.5 2

3 tons per acre. Labor for straw application is 3.5 hours per acre at $15 per hour. Grass Seed - A rye grass and red fescue mixture is used, planted at rates of 50 and 20 pounds per acre, respectively. The cost of grass seed is estimated at $158 per acre (Intermountain Farmers Association, 2015). Custom planting for grass is $17.50 per acre (Drollette, 2010). Legume Seed - Birdsfoot trefoil is used as a legume and is planted at a rate of 12 pounds per acre. The cost of birdsfoot trefoil is $156 per acre (Hancock Seed Company, 2015). Custom planting for birdsfoot trefoil is assumed at $17.50 per acre (Drollette, 2010) Fertilizer - A balanced fertilizer costs $0.68 per pound and is applied at a rate of 300 pounds per acre (Intermountain Farmers Association, 2015). Urea - Urea costs $0.67 per pound and is applied at a rate of 150 pounds per acre (Intermountain Farmers Association, 2014). Herbicide - Roundup costs $12.50 per gallon and is applied at a rate of.5 gallon per acre (Intermountain Farmers Association, 2014) and custom spraying rates are $7.67 per acre (Drollette, 2010). Paper Mulch - Paper mulch is estimated at $0.33 per pound and is applied at a rate of 1573 lbs. per acre. (Turbo Turf, 2013) Labor is assumed at 13.5 hours per acre at a rate of $15 per hour. The hydroseeder expense is $46.60 per acre ($8,900 used purchase price and 10-year useful life (Surplus Equipment Exchange, n.d.)). Yields Yields and packout rates per treatment are based upon averages from the Utah State University research farm during the 2013 and 2014 seasons (Table 1). Table 1: Annual Peach Orchard Yields Yield (lbs/acre) Treatment Average Packout Rate Organic Baseline Budget 15,015 15,015 15,015 80% Tillage 26,866 21,534 24,200 88% Fabric Mulch 19,669 20,804 20,237 86% Legume Straw 29,048 19,828 24,438 80% Organic Treatments Conventional/ Integrated Treatments Legume Mowing 26,596 21,613 24,105 83% Grass Straw 21,344 20,153 20,749 85% Grass Mowing 19,654 19,408 19,531 87% Conventional Baseline Budget 19,250 19,250 19,250 80% Conventional 33,014 10,731 21,873 94% Conventional Transistion 22,236 12,483 17,360 89% Integrated Fertility 25,972 12,219 19,096 92% Integrated Weed 33,457 10,678 22,068 85% Organic Paper Mulch 16,074 10,685 13,380 86% Note: Yields and packout rates used in the partial budgets assume full orchard production (which starts in year 6 of orchard establishment) and do not consider the possibility of a partial or total crop loss. 3

4 Market Prices Revenues for both organic and conventional orchards are calculated by using the prices in Table 2. Wholesale prices reflect prices paid by retail locations such as Associated Foods during Direct Market prices reflect prices received by producers at various farmers markets in Northern Utah and Colorado during the 2014 market season Also shown in Table 2 is the percentage of peaches sold in each market. Wholesale markets mainly consist of grocery stores, and direct markets include farmers markets, CSA programs, and roadside stands. Table 3: Baseline Peach Orchard Budgets (Annual $/Acres) Table 2: Peach Prices and Market Allocation Market Type Price Per Pound Percentage Organic Conventional Sold Wholesale $2.08 $ % Direct Market $3.87 $ % Baseline Peach Orchard Budgets The Organic Baseline Budget and the Conventional Baseline Budget are taken from the peach orchard cost and returns studies published by USU Extension (Knudsen et al., 2016a; Knudsen et al., 2016b). These will be used as the baseline budget when comparing the costs and returns of the various treatments (Table 3). Fixed Costs are costs that are assumed to remain constant across all orchards within the organic and conventional treatments such as irrigation costs, tree pruning, land, etc. In Tables 3, 4, and 5, the fertility category includes the cost of compost, feathermeal, trace elements spray, ammonium sulfate, and fertilizer used in each treatment, the expense of the spreader (where applicable), and labor for the application of each. The cover crop category includes the grass and/or legume seed, plus the labor expense for planting. The weed control category includes the herbicide and/or the straw used in the treatment, and labor to apply each. The remaining categories include the expenses listed in the descriptions above. Partial Budget Comparisons Table 4 shows the change in costs and revenues for the organic orchard treatments in comparison to the USU baseline organic peach orchard budget. The difference in total net returns for each treatment over the baseline budget is given at bottom. Table 5 shows the change in costs and revenues of the conventional/integrated orchard treatments in comparison to the USU baseline conventional peach orchard budget. The difference in total net returns for each treatment over the baseline budget is given at bottom. 4

5 Table 2: Organic Treatment Partial Budgets (Annual $/Acre) Organic Organic Fabric Mulch Legume Legume Grass Grass Straw Baseline Tillage Straw Mowing Mowing Packout Rate 80% 88% 86% 80% 83% 85% 87% Revenues Additional Revenues $ - $ 32,605 $ 18,935 $ 26,475 $ 28,078 $ 19,752 $ 17,490 Additional Costs Fertility $ - $ 685 $ 528 $ 581 $ 528 $ 712 $ 869 Sulphur $ - $ - $ - $ - $ - $ - $ - Pest Control $ - $ - $ - $ - $ - $ - $ - Weed Control $ - $ (375) $ (375) $ (198) $ (375) $ (198) $ (375) Tilling $ - $ - $ (122) $ (122) $ (122) $ (122) $ (122) Mowing $ - $ (63) $ (63) $ 38 $ 38 $ 38 $ 38 Cover Crop $ - $ 68 $ 68 $ 156 $ 156 $ 68 $ 68 Mulch Fabric $ - $ - $ 272 $ - $ - $ - $ - Paper Mulch $ - $ - $ - $ - $ - $ - $ - Total Additional Costs $ - $ 315 $ 307 $ 455 $ 225 $ 498 $ 477 Resulting Change in Net Returns Difference in Revenue $ - $ 32,605 $ 18,935 $ 26,475 $ 28,078 $ 19,752 $ 17,490 Difference in Costs $ - $ 315 $ 307 $ 455 $ 225 $ 498 $ 477 Total Net Return Difference $ - $ 32,290 $ 18,627 $ 26,020 $ 27,853 $ 19,255 $ 17,012 5

6 Table 3: Conventional/Integrated Treatment Partial Budgets (Annual $/Acre) Conventional Baseline Conventional Organic Transition Integrated Fertility Integrated Weed Paper Mulch Compost Packout Rate 80% 94% 89% 92% 85% 86% Revenues Additional Revenues $ - $ 10,300 $ 100 $ 4,327 $ 6,701 $ (7,772) Additional Costs Fertility $ - $ (15) $ 1,976 $ 1,411 $ 8 $ 1,332 Sulphur $ - $ - $ (80) $ - $ - $ - Pest Control $ - $ - $ - $ - $ - $ - Weed Control $ - $ - $ - $ - $ - $ (21) Tilling $ - $ - $ - $ - $ - $ - Mowing $ - $ (63) $ 38 $ 38 $ (63) $ 38 Cover Crop $ - $ 68 $ 68 $ 68 $ 68 $ 68 Mulch Fabric $ - $ - $ - $ - $ - $ - Paper Mulch $ - $ - $ - $ - $ 633 $ 633 Total Additional Costs $ - $ (11) $ 2,002 $ 1,516 $ 645 $ 2,050 Resulting Change in Net Returns Difference in Revenue $ - $ 10,300 $ 100 $ 4,327 $ 6,701 $ (7,772) Difference in Costs $ - $ (11) $ 2,002 $ 1,516 $ 645 $ 2,050 Total Net Return Difference $ - $ 10,311 $ (1,902) $ 2,811 $ 6,056 $ (9,821) 6

7 References Arbico Organics. (2014). Pest control solutions. Retrieved from Chapman, B. (2014). Price quote for BBI 14 endurance hydraulic pull type compost spreader. Message to Author. 7 October Drollette, S.A. (2010). Custom rates survey report 2009/2010. Utah State University Fact Sheet, AG/ECON/ RM. Earthwise Organics, Inc. (2014). Earthwise Organics, Inc. agriculture product list-august Message to Author. 8 October Galinato, S., R. Gallardo, and C. Miles. (2014) Cost Estimation of Establishing a Cider Apple Orchard in Western Washington. Washington State University Fact Sheet, FS141E Online at: tstream/handle/2376/5149/fs141e.pdf;sequenc e=2. Hancock Seed Company. (2015). Birdsfoot Trefoil Seed. Retrieved from 241/birdsfoot-trefoil-seed-525/. Intermountain Farmers Association, Country Stores. (2014). Personal interview. 15 September Intermountain Farmers Association, Country Stores. (2015). Personal interview. 20 January JMS Stylet-Oil. (n.d.). JMS Stylet-Oil Products. Retrieved from Knudsen, T., K. Curtis, J. Reeve, and B. Black, (2016a). Northern Utah Organic Peach Orchard Costs and Returns, 20 Acres, Utah State University Fact Sheet, Applied Economics/ pr. Knudsen, T., K. Curtis, J. Reeve, and B. Black, (2016b). Northern Utah Conventional Peach Orchard Costs and Returns, 20 Acres, Utah State University Fact Sheet, Applied Economics/ pr. Painter, K. (2011). The Costs of Owning and Operating Farm Machinery in the Pacific Northwest: A Pacific Northwest Publication #346. Online at: /PNW0346/PNW0346.html. Seven Springs Farm. (n.d.). Feathermeal. Retrieved from Surplus Equipment Exchange. (n.d.). Easy lawn hydroseeding equipment (used). Retrieved from roseeders_forsale.asp. Turbo Turf. (2013). Products. Retrieved from Weed Badger. (2014). Factory direct price quotation. Message to Author. 13 October Utah State University is committed to providing an environment free from harassment and other forms of illegal discrimination based on race, color, religion, sex, national origin, age (40 and older), disability, and veteran s status. USU s policy also prohibits discrimination on the basis of sexual orientation in employment and academic related practices and decisions. Utah State University employees and students cannot, because of race, color, religion, sex, national origin, age, disability, or veteran s status, refuse to hire; discharge; promote; demote; terminate; discriminate in compensation; or discriminate regarding terms, privileges, or conditions of employment, against any person otherwise qualified. Employees and students also cannot discriminate in the classroom, residence halls, or in on/off campus, USU-sponsored events and activities. This publication is issued in furtherance of Cooperative Extension work, acts of May 8 and June 30, 1914, in cooperation with the U.S. Department of Agriculture, Ken White, Vice President for Extension and Agriculture, Utah State University. 7